please enter a title 459533

Financial statements for Larkins Company appear below:

Larkins Company

Statement of Financial Position

December 31, Year 2 and Year 1

(dollars in thousands)

Year 2 Year 1

Current assets:

Cash and marketable securities

Accounts receivable, net

Inventory

Prepaid expenses

Total current assets

Noncurrent assets:

Plant & equipment, net

$180

210

130

50

570

1,540

$180

180

120

50

530

1,480

Total assets $2,110 $2,010

Current liabilities:

Accounts payable

Accrued liabilities

Notes payable, short term

Total current liabilities

Noncurrent liabilities:

Bonds payable

Total liabilities

Stockholders’ equity:

Preferred stock, $20 par, 10%

Common stock, $10 par

Additional paid-in capital–common stock

Retained earnings

Total stockholders’ equity

Total liabilities & stockholders’ equity

$100

60

90

250

480

730

120

180

240

840

1,380

$2,110

$130

60

120

310

500

810

120

180

240

660

1,200

$2,010

Larkins Company

Income Statement

For the Year Ended December 31, Year 2

(dollars in thousands)

Sales (all on account)

Cost of goods sold

Gross margin

Selling and administrative expense

Net operating income

Interest expense

Net income before taxes

Income taxes (30%)

Net income $2,760

1,930

830

330

500

50

450

135

$315

Dividends during Year 2 totaled $135 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, Year 2 was $150.

5. Larkins Company’s return on total assets for Year 2 was closest to:

A. 13.6%.

B. 16.0%.

C. 15.3%.

D. 17.0%.

***The answer is NOT C, 15.3%